EURJPY TECHS: Outlook Remains Bullish

Decent SOFR & Treasury option flow leaned towards low delta put structures Monday, fading the bounce in underlying futures to mid-December levels. Projected rate cuts into early 2025 gain momentum vs. this morning, levels (*) as follows: Jan'25 steady at -2.8bp, Mar'25 -14.6bp (-13.6bp), May'25 -20.6bp (-19.5bp), Jun'25 -30.3bp (-28.8bp).

• SOFR Options
  • Update, over +18,000 SFRZ5 95.00 puts 8.0 vs. 96.065/0.10%
  • +2,500 SFRJ5/SFRM5 95.50/95.62/95.75 put fly strip, 5.25
  • +2,500 SFRF5 95.75 puts 1.25 vs. 95.805/.05%
  • Block, 15,000 SFRM5 96.125/96.62 call spds 4.5 over SFRM5 95.56 puts vs. 95.945/0.36%
  • +6,000 SFRZ5 95.00 puts, 8.0 vs. 96.065/0.10%
  • -3,000 2QG5 95.87/96.00/96.12 put trees 4.0, 2 legs over ref 96.025
  • over +34,200 0QM5 96.37/97.00 call spds 6.5 over 95.37/95.62 put spds ref 96.02
  • 3,800 SFRK5 96.06/96.25 call spds ref 95.945
  • 2,500 SFRF5 95.75/95.87/96.00/96.12 call condors ref 95.825
  • 2,500 0QH5 95.62 puts ref 96.015
• Treasury Options
  • -10,000 TYH5 109 straddles, 209-211 ref 108-30.5
  • 1,000 TYG5 106/107 4x3 put spds ref 108-12
  • +10,000 wk2 TY 107/108 put spds, 8
  • +5,000 wk3 FV 106.75 calls 2 over FVG5 107 calls vs. 106-11/0.05%
  • 1,200 FVH5 105/107.5 strangles ref 106-08
  • 3,800 Wednesday wkly 30Y 113/113.5 put spds
  • 1,200 TYG5 107/108.25 put spds ref 108-19

• RES 4: 160.00 Round number resistance   
• RES 3: 159.45 High Jul 12
• RES 2: 159.26 0.618 proj of the Sep 16 - Nov 15 - Dec 3 price swing  
• RES 1: 158.08 High Dec 26 
• PRICE: 157.06 @ 16:10 GMT Dec 30
• SUP 1: 155.89/155.01 High Nov 20 / 20-day EMA
• SUP 2: 153.11/150.90 50-day EMA / Low Dec 10  
• SUP 3: 149.37 Low Dec 06 
• SUP 4: 148.65 Low Dec 03 and the bear trigger

Prices slipped Monday, but an over-arching bullish condition remains. The breach of 156.75, the Nov 15 high and a bull trigger, confirmed a resumption of the uptrend and has paved the way for a move towards 159.45, the Jul 12 high. Moving average studies are in a bull-mode position highlighting a clear dominant uptrend. Initial firm support is 155.01, the 20-day EMA. A pullback would be considered corrective.     

• Stocks remain weaker but are trading well off early session lows in late Monday trade - stocks have been gradually paring losses since this mornings better than expected pending home sales (2.2% vs. 0.8% est) and Dallas Fed Mfg (3.4 vs. -3.0 est) data.
• Currently, the DJIA trades down 337.49 points (-0.79%) at 42655.64, S&P E-Minis down 54 points (-0.9%) at 5973, Nasdaq down 165.6 points (-0.8%) at 19557.58.
• Consumer Discretionary and Materials sectors continued to underperform in late trade, auto-related shares weighing on the former: Tractor Supply -2.79%, Tesla -1.98%, LKQ Inc -1.79% and O'Reilly Automotive -1.48%. Metals and mining shares weighed on the Materials sector: Albemarle -2.10%, Newmont Corp and Freeport-McMoRan both -1.5%, FMC Corp -1.49%.
• On the positive side, the Energy sector continued to outperform while Information Technology sector shares gained momentum. Oil $ gas stocks buoyed the Energy sector as crude prices inched higher (WTI +0.33 at 70.95): EQT Corp +5.05%, Coterra Energy +4.22%, Devon Energy +2.76%.
• Meanwhile, semiconductor stocks buoyed the IT sector with Nvidia +1.68%, VeriSign +0.51% while Autodesk and Adobe both gained 0.05%.
• Reminder, the next round of quarterly earnings kicks off mid-January with Blackrock, Bank of NY Melon, Wells Fargo, JP Morgan, Goldman Sachs, Citigroup, US Bancorp, M&T Bank and PNC all reporting between January 13-16.